Ontario Teachers’ Pension Plan (OTPP) will likely launch a process to sell Sahyadri Hospitals early next year, less than 36 months after it announced the acquisition, which was its first control private equity buyout deal in India, according to people aware of the matter.
The $175 billion Canadian pension fund that manages retirement money for 340,000 working and retired school teachers and administrative staff in the province of Ontario has so far remained more inclined to invest in public equities in the country. It had acquired the privately owned, Maharashtra-based Sahyadri with 1,000 beds and nine facilities in August 2022 for an undisclosed sum. It is seeking upwards of $500 million for its controlling stake in the chain, according to the people cited. OTPP typically invests with a longer-term horizon but could be exiting Sahyadri to capitalise on heightened investor interest in the healthcare delivery sector, according to them.
Pan-India Interest Likely
A number of hospital chains have expanded through mergers and acquisitions since Covid. Private equity investors have made substantial returns from their investments in such deals.
Sahyadri Hospitals says it’s the largest chain of hospitals in Maharashtra and has multiple facilities in Pune, the second largest city in the state. The sale could attract pan-India hospital players and private equity funds.
OTPP did not respond to queries.
Sahyadri Hospitals’ founders are Charudutt Apte, Sadanand Bapat and Nitin Desai, who remain involved in the functioning of the hospital chain. The chain started with the Pune Institute of Neurology as its first hospital in 1994. It has 2,000 clinicians and 4,000 support staff as per its website. Its nine facilities are located in Pune, Nashik and Karad.
Chain of Hospital Deals
Recently, Blackstone-backed Quality Care announced a merger with the listed Aster DM Healthcare to create the country’s third-largest hospital chain with 38 hospitals and 10,000 beds.
Temasek-backed Manipal Hospitals has also expanded its footprint through acquisitions in the recent past. It bought the Emami group’s Amri Hospitals for Rs 2,300 crore in September last year and subsequently acquired Kolkata-based Medica Synergie for Rs 1,400 crore in April, both deals giving it a greater presence in eastern India.
Max Healthcare merged with Radiant Life Care in 2020 to form a hospital chain with a pan-India footprint with 16 hospitals and 3,500 beds. It has now expanded capacity to 22 hospitals and 4,300 beds. KKR is buying HCG, India’s largest cancer care chain from CVC Capital.
OTPP’s 2023 annual performance review showed it achieved a total fund net return of 1.9% for the year ended December 2023.
This compares with its 2022 total fund net return of 4% and five-year total fund net return of 7.2%. The review mentions “underexposure in listed equities” as one of the factors for the decline in returns.
The pension plan, which was founded in 1990, paid $7.6 billion in benefits to its members in 2023.
A 2022 report from the pension fund’s website states that it has invested over $3 billion in India. Other than Sahaydri, OTPP has invested in renewable energy platform Mahindra Susten, National Highways Infrastructure Trust and National Investment and Infrastructure Fund. Its venture arm has invested in Xpressbees, a logistics company backed by multiple global investors.
Source: Economic Times